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Tech Stocks to Profit From Commodity Shock

By Tom Taulli

NEW YORK ( TheStreet) -- Commodities prices have surged, sending a shock wave through companies that rely on them, including manufacturers, apparel makers and food producers.

The commodities boom has been great for investors. (Read Can October's Best-Performing Commodities Continue Their Run?) However, commodity-dependent companies' profit margins are being squeezed, pressuring stock prices.

As a result, companies are trying to use technologies to improve their cost structures and streamline operations -- supply-chain management, better sourcing and enhanced pricing strategies. And companies that can provide those services stand to profit. Here's a look at three:

1. PROS Holdings (PRO - Get Report): This company develops enterprise software that allows large companies to optimize their pricing. That involves processing huge amounts of data in real-time and then applying complex formulas. The upshot is that PROS technology can help companies not only with setting the best prices but also when to give discounts, increase shipping charges or provide promotions.

Even a small increase in prices -- if done correctly -- can have a major impact on a company's profits. This is especially important in the current economic environment, where it can be difficult to pass on price increases to consumers.

While 2009 was a difficult year for PROS, the fundamentals have been much better this year. The company has taken strides to make its software easier to implement, which is a key for getting new customers.

Despite all this, PROS still is showing declining revenue (according to its latest quarterly report) and is unprofitable. Because of the large expense of its software, it will likely take some time to get more traction.
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